Yuan weakens past key 7.3/dollar level

The offshore yuan weakened past the key 7.3 a dollar level following the party congress and the threat of further outflows due to hawkish Federal Reserve bets. The Chinese currency sank to 7.3098 per dollar, an all-time low since the unit started trading in 2010. That's after the currency traded in Shanghai weakened to a fresh 14-year low amid the absence of a shift in Covid policies at the party summit even as the measures have weighed down on the economy.

The yuan is also under pressure to fall as aggressive Fed hike bets threaten to widen the US-China yield gap and drive outflows. Moreover, the People's Bank of China ended its streak of steady yuan fixings on Monday, which was seen as a sign its toning down support for the currency after the Communist Party congress ended on Sunday.

Around 90% of the 30 yuan traders who responded to a Bloomberg survey last week had forecast the PBOC to ease its tight-ranged fixing after the party congress. Half of the survey respondents also said they expected the yuan to be pushed to 7.4 or even 7.5 per dollar within the year, and only 10% saw it staying at around 7.25. The offshore yuan was emerging Asia's worst performing currency on Monday while the onshore unit fell to a fresh 14-year low against the dollar.


Yen Slips more Despite Signs of Intervention
The yen weakened Monday despite signs that Japan has ramped up its defense of the currency with a second likely intervention in as many sessions.

The currency traded 0.9% weaker at around 149 per dollar on Monday, paring a more than 1.4% surge earlier in the session that stoked speculation officials were supporting the currency again.